Winning algebraic formula

October 17, 1997

THE Algebra that underlies derivatives trading has won two United States professors the Nobel prize for economics. The $1 million (Pounds 600,000) prize from the Royal Swedish Academy of Sciences went to Robert Merton of Harvard University and Myron Scholes of Stanford who, with the late Fischer Black, devised a new way to value stock options. According to the committee, it was "among the foremost contributions to economic sciences over the last 25 years". The "Black-Scholes" formula was published in 1973. It realised the price of an option should depend on the expected volatility of its underlying share or bond.

Please login or register to read this article

Register to continue

Get a month's unlimited access to THE content online. Just register and complete your career summary.

Registration is free and only takes a moment. Once registered you can read a total of 3 articles each month, plus:

  • Sign up for the editor's highlights
  • Receive World University Rankings news first
  • Get job alerts, shortlist jobs and save job searches
  • Participate in reader discussions and post comments

Have your say

Log in or register to post comments